In early March, the night wind off New York City's East River is sharp. On Fulton Street, the damp air is scented with fish and wood smoke. For five city blocks just south of the Brooklyn Bridge, stainless steel 18-wheeler lorries fight for space with tiny forklift trucks and hand-carts loaded with seafood.

New York's fish market has been here since 1833 and most of it is in the original buildings. The market serves 81/2 million people and is controlled by the Mafia.

Three months ago a restaurateur called Remi came here to buy fish; he left with his head torn open by a 12-inch hauling hook. His restaurant had been open only three months. He came to New York from Connecticut ready for the big time, but then the shakedowns started. Guys would tell him he had to pay for parking, $60 for two hours. Then there would be another 50 bucks to carry stuff to his truck, $100 to load it. One day Remi refused to pay for parking. "I told the guy he had no authority," he says. "I went to buy my fish, when I got back to the truck, it was trashed."

Remi was inspecting the damage when five men surrounded him. "They pushed me between two big lorries. I felt this stabbing near my eye, then a terrible pain. Then they were gone. I stumbled back out on to Fulton Street, there was blood everywhere."

According to Rudy Washington, New York's Commissioner of Business Services, Remi was a victim of organised crime. To be specific, New York State police believe Remi was probably attacked by men who work for Frank "The Fish" Fogliano, an associate of the Genovese crime family. Mr Fogliano is the owner of the Fair Fish Company. In 1982 he was convicted of collecting illegal payoffs at the market. Now he is believed to be a Genovese family lieutenant, or "capo", reporting to Vincent Romano, who is said to run Fulton Street, a fiefdom the Genovese family has controlled since the Twenties.

"If you were to close your eyes and walk into that market, it could be the 1930s," says Mr Washington. "For the most part it's a group of people in four or five city blocks doing whatever they want to do, with their own form of law. There's extortion at every stage of the market's business."

Mr Washington believes that the Genovese crime family imposes a 20 per cent tax on every ounce of seafood eaten in New York City. That is why the city took over the management of the fish market on 14 March. It is a bold move, designed to drive the Genovese family out of the fish business, but city watchers say that, like previous efforts to control the Mafia, it is destined to fail.

The takeover means that the market's rents will now be set and collected by City Hall, but only one-third of the market's properties are rental buildings. The rest are largely owned by associates of the Genovese family. City officials are also supposed to patrol the market every night to enforce health and safety regulations. In practice, market workers say, that means two vans now park at each end of Fulton Street full of city officials who spend the night drinking coffee and sleeping.

Frank Fogliano is not an easy guy to talk with. At 2am outside the Fair Fish Company, Frank the Fish is busy with his hook. "I ain't talking to you," he says. But how does he feel about the city takeover? "It's bullshit. There ain't no crime here. The Mayor, Giuliani, he's tried this twice before, when he was a prosecutor. The city wants us off this land, to sell it for a hotel. By saying we're the mob, he gets us out cheap." He gives me a hard stare. "Now, if you know what's good for you, you'll find some place else to stand."

New York's five Mafia families have been through hard times. The Gambinos were severely damaged by the 1993 conviction of the "Dapper Don", John Gotti. The Lucchese family was infiltrated by the FBI in the Eighties and has yet to recover its reputation. The Colombo and Bonnano families have also lost their leaders to informants and now have fewer than 200 known members between them. For an organisation with an oath of loyalty or death, the New York Mafia has had a lot of stool pigeons. The exception is the Genovese family, which remains strong because its members have been relatively loyal.

The official head of the family is Vincent "the Chin" Gigante. He has been charged with murder and racketeering but remains free. "My client is insane," says Gigante's lawyer, Barry Slotnick. "He couldn't run a candy store." To promote this claim, New Yorkers in Greenwich Village often experience what prosecutors say is an elaborate act - the sight of Mr Gigante dancing down Bleecker Street in his bedclothes, singing in Italian.

"If this is a ruse, it is a clever ruse," says Professor Robert Kelly, a past president of the International Association for the Study of Organised Crime. "To claim mental incompetence is a shocking break with the Mafia's machismo culture."

For "Vinny the Chin", the ploy has kept him out of jail. He is restricted to an area 10 blocks square, but that allows him to meet with his deputy, Barney Bellomo. The Genoveses' resilience has won admiration from their bitter enemy, the New York State Organised Crime Task Force. "The Genovese family are the Ivy Leaguers of organised crime," says Joe Coffey, a senior task force agent. "I think Gigante is sick, but it don't matter. They have Bellomo as acting boss and he's real smart."

Barney Bellomo is just 35. Those who know him say he's the main reason the Mafia survives in New York and is beginning to prosper again. "The Genovese family has great influence," says Mr Coffey. "It's all down to Bellomo, he now has the respect of all the five crime families and he's very difficult to tail."

According to Mr Coffey, there's another reason the Genovese family has retained its power. "John Gotti and the Gambinos, plus the other families, they ran the drug trade and they became their own best customers and worst enemies." Coffey remembers a confrontation from his days as a beat cop with the then Genovese godfather, "Fat Tony" Salerno. "Old Tony told me to let him know if he saw any of his men taking drugs, he said it would be one of the last things they did take."

Salerno was eventually jailed for several counts of murder and died in prison. One of his victims was a capo who broke the Genovese rule on drug dealing. Barney Bellomo has told his men the same rule still applies. "The Genovese family survives because it stayed out of the drug trade," says Joe Coffey. "Now they control all the traditional businesses of La Cosa Nostra and they're getting stronger."

That increased strength means better control of labour unions. Barney Bellomo's brother-in-law Anthony Fiorino has just been indicted for union racketeering at New York's Jacob J Javits Convention Centre. It is alleged that Mr Fiorino controlled the 100 carpenters who work on convention displays. "The family's control of the carpenters was enforced by violence," says the federal prosecutor Ken Conboy, who is investigating at least one murder linked to the union's activities. "It was very lucrative. The carpenters would charge extortionate rates to complete a stand. People who didn't pay could not exhibit - and would probably get a beating."

The Mafia's domination at the Javits Centre has become an explosive issue for New York politicians. The centre was run by Fabian Palomino, an appointee of the former New York governor Mario Cuomo. It is alleged by the New York State senate majority leader, Joseph Bruno, that Palomino skimmed cash from unions at the centre, some of which was used to fund Mario Cuomo's failed re-election bid last year. In return, Mr Palomino claims mob money helped elect George Pataki, the Republican who beat Mario Cuomo. Palomino points to two New York haulage companies that assisted the Pataki campaign, both of which have ties to the Genovese family.

On Monday, Governor Pataki named a new chairman for the Javits Centre and announced an inspector to probe Mafia finances, but Joe Coffey doubts much will happen. "Politicians lack the will to crack the Mafia open. Too many have too much to lose by closing the mob down."

The Genovese family does face a more substantial threat. It comes from the Chinese gangs who control half of New York's heroin trade.

"The Mafia is dumb," says the organised crime expert Peter Maas, author of Serpico, The Valachi Papers and the soon to be published novel China White. "The Chinese gangs are smarter and richer," he says. "Plus they are growing faster than any other ethnic group. The NYPD and the FBI are way behind the game."

Mr Maas believes a vicious showdown is in the making. "The Genovese family has become dominant among New York's Italian Mafia. If the Chinese can take them down, they own New York, and where better to start the war than Fulton Street, the Genoveses' traditional stronghold. Chinese gangs are already in the fish market and more will come."

But the Genovese family has other ideas. The Organised Crime Task Force believes the Genoveses have now forced the other Mafia families out of the trucking business, the meat market, gambling, construction and shipping. The Task Force estimates that if it were a legitimate business, the family would report annual revenues of more than $2bn for its East Coast operation. That buys a lot of influence and a lot of firepower.

It's 3am and Roy Albanese stands by his food truck. Mr Albanese has served coffee in the fish market for more than 20 years. "We've seen Chinese here, sure. But we ain't going nowhere," he says. "We have our own way of doing things here. If the Chinese want a war, we'll give it to them."